Monday, September 28, 2015

Supplement Your Entrance Counseling — But Heed Guidelines

Thinking of supplementing the required entrance counseling
for some or all of your first-time student loan borrowers, but not sure you’re adhering
to recently issued federal guidance?

You can supplement the minimum requirements for entrance
counseling for all student-borrowers who have not yet completed loan counseling
at your school or another school. You even can customize your loan counseling
information just for those groups your targeted default
prevention has shown are most at risk of defaulting. But supplemental
enhancements to entrance counseling information must be reasonable in amount
and scope, and they must allow students to receive federal loan funds in a
timely manner.

Financial literacy
The U.S. Department of Education addressed loan counseling requirements and
flexibilities in this spring’s Dear Colleague Letter GEN-15-06. The
Department indicated that several activities are permissible beyond what is
required by regulations — including anything from completion of a budgeting
worksheet, to a review of online lessons, to attendance at a presentation.

The letter specifically cites as acceptable those activities
“designed to improve financial literacy and the student’s understanding of the
implications of borrowing.” Again, though, those additional activities must be
reasonable in amount and scope. And they cannot “unreasonably impede a
student’s ability to borrow.”

Relevant topics
If you’re thinking of adding some financial literacy training to your required
entrance counseling, try to find topics that are most relevant to your
students. The following are some topics that would be a great place to start.

Student loan management — Teach
students how to make informed decisions about their borrowing and avoid
over-borrowing. Have borrowers research and compare expected income with
estimated monthly student loan payments. Then consider sending borrowers
information about their student loan indebtedness and estimated monthly
payment annually to help keep them informed of their debt load.

Student
loan repayment — Explain how students can gather information
about loans and repayment plans, options available to borrowers who are
having repayment trouble, and borrowers’ responsibilities for repaying
federal student loans.

Budgeting —
Teach students how to determine the amount of money they really have for
their budgets on a monthly basis, take them through the process of
creating a budget, share money-saving strategies, and provide resources to
determine projected salaries for different career choices.

Continued learning
It’s worth noting that financial literacy training you require as part of your
entrance counseling can plant the seed for broader interest in personal finance
topics.

You can choose to create additional learning opportunities
for your students throughout their academic careers. In fact, you can recommend
additional counseling any time after completion of mandatory entrance loan
counseling. Just be careful not to make completion of additional counseling a
condition for receipt of Direct Loan funds.

Supplementing your required entrance counseling can be a
great way to help your students avoid the pitfalls of student loan default. So
consider topics that would work best for your students and your school,
determine whether you want to target certain groups in your enhanced entrance
counseling, and evaluate whether your plans fall within federal guidelines.

If you need help with your default prevention planning, targeting
borrowers at risk of defaulting, or financial literacy education, visit www.usafunds.org.